“The Largest NGO in the World is in DC”

So claims Paul Hawken, referring to the current administration’s laissez-faire approach to environmental regulation. His new book suggests that thousands of smaller groups are going to have to take the government’s place, offering small-scale solutions for sustainability. Hawken’s remedy reminds me of the “new governance” theory that’s been hot in admin circles for the past two decades. NG emphasizes flexible and fluid relationships between public and private bodies to develop pragmatic policy responses to intractable problems.

I find a lot to admire in this work, but a recent interview with corporate environmental evangelist Ray Anderson highlights some limits to the approach:

Mr. Anderson is . . . proud to say that as a member of an advisory council at Georgia Tech, he persuaded the institution to modify its mission statement to proclaim the goal of “working for a sustainable society.” But there is a lot that even business cannot accomplish on its own, he said. For example, he said, the tax code is “perverse,” in that it puts heavy taxes on good things, like income and capital, and leaves a lot of bad things, like energy use, relatively unscathed. And economists typically underestimate the true cost of doing business because they exclude “externalities,” like environmental damage from pollution.

Anderson’s story of building a sustainable carpet manufacturer was a major highlight of the film The Corporation, and he makes a lot of sense here. As Carol Rose pointed out in The Several Futures of Property, some authoritative institution has to set some initial allocation of “rights to pollute,” etc. And someone has to come up with an agreed way of measuring externalities, a notoriously difficult process. If, as Ed Glaeser proposes, “American and European carbon taxes [should] provide funding that could be used to reward poorer countries for cutting emissions,” some government has to impose the tax.

Of course, the NG theorists realize these things. I just bring them up to chasten any optimism about “small-scale” solutions making the crucial contribution to solving environmental dilemmas. It’s no wonder why the “average building in the U.S. uses roughly a third more energy than its German counterpart;” our “federal government has yet to establish universal efficiency standards for buildings.”

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